The world watched the gyrations of the stock market last week with the fascination normally reserved for car crashes. Then the Iowa straw poll picked Michele Bachmann as the front runner for the GOP presidential nomination.
If all one did was watch television it might be possible to believe all that was important. But the wild swings in the Dow and other indicators suggest the stock market is wholly uncertain of the future. And no one actually thinks Bachmann will be the Republican nominee.
Reality, however, is both less entertaining and more frightening. And a quick look at the underlying economy puts both the stock market and the political climate in perspective. Simply put, regardless of who is elected to what this economy is going to take some time to sort out.
At the center of this countrys economic woes is the housing market. That it is still far from healthy is illustrated by two recent stories. The Denver Post reported last week that Jefferson County essentially suburban Denver is considering legislation to deal with abandoned homes.
Apparently, too many homeowners under water on their houses, that is owing more on their mortgage than the home is worth, have simply walked away, leaving their houses neglected and untended. In one particularly egregious case the Post described, the homeowner is not only out of state but transferred title of the house to her mother who then died. It is not now clear to whom the property belongs, let alone how the county can get anyone to take responsibility for it.
The problem is worse elsewhere. High Country News, reflecting reporting originally done by the Arizona Daily Star, said in May that Arizona has more than 460,000 vacant homes. That works out to one vacancy for every six homes. The magazine quoted an economist from the University of Arizona as saying, Thats enough housing to accommodate an entire decades worth of population growth if the population were growing.
There, too, the problem is people getting upside down, with mortgages greater than the value of their homes. And if housing prices continue to decline nationwide that situation could worsen.
It should be noted, of course, that not all areas are equally affected.
Southwest Colorado, like many desirable places to live, is relatively unscathed. Home prices have declined, but hardly collapsed. Nor should they be expected to. This region has always been a difficult place to make a living, but it is also a great place to live. That is a more natural balance than some areas have seen.
Likewise, the coastal areas of California have not been affected nearly as much as the areas inland of Los Angeles and San Francisco. In part, that is because the coast is the more desirable place to live. But it is also the case that the inland areas are where most of the growth occurred in recent years the drive till you qualify parts of the state where too many first-time homeowners unwittingly got in over their heads.
Those are real people. Their problems are real. And, nationwide, the cumulative effect of those problems is a continuing drag on the economy for all of us. That is a situation that will take some time to work through.
Last weeks Wall Street roller coaster ride was not the crisis it was sometimes said to be. As anyone with a 401(k) understood, real money was at stake, but in the up and down a lot evened out.
Recreating a healthy economy will be a longer, more laborious process.
